Crude oil futures contract fell $4.69, or 6.3%, on a good US crude inventory report,

The Nov Crude oil futures contract fell $4.69, or 6.3%, on a good US crude inventory report, to close at $69.85, which is the first close under $70 in over a year. OPEC is rattled, and will meet next week instead of November. Market observers now say OPEC will agree to a cut of one million barrel per day to get the price back up-and the market believed the story. The price rose sharply $73.02 before sinking back to $70.98 at 12:12 pm GMT, according to Bloomberg.

So now it’s a duel between producers determined to keep their budgets funded and a market that sees recession cutting demand by a great deal for a very long time. Mastercard said, for example, that demand for gas fell 9% in the latest week. Demand was not as inelastic as we all thought over the past year. The current thinking is that demand increases from booming economies like China will offset drops in the West for a net flat demand outcome.

Well, maybe. The US consumes 24% of the world’s oil. The US Energy Dept report yesterday that fuel demand averaged about 18.6 million barrels a day during the past four weeks, the lowest since June 1999. US oil supplies rose 5.6 million barrels to 308.2 million barrels last week, and crude inventories are set to rise another 2.6 million barrels, according to the Bloomberg survey.

Buy for now

Barbara Rockefeller
Forex Trading Reports

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